GoodBulk Bets on Capesize Market Rebound

Monaco-based dry bulk shipping company GoodBulk wrapped up the first quarter of 2018 in the black with a net profit of USD 9 million.

The earnings were boosted by a net capital gain of USD 5.4 million from the M/V Aquabeauty’s sale.

The first months of the year were very busy as the company completed the delivery of 13 Capesize vessels acquired from funds managed by CarVal Investors in October 2017.

“GoodBulk continues to execute its plan to build a leading owner of dry bulk vessels with a strategy of active asset management and low financial leverage to create a portfolio with significant operational leverage in a recovering dry bulk market,” the company said.

Namely, GoodBulk has invested around USD 20 million into the acquisition of a 2007-built Capesize vessel Aquakatie, built by Shanghai Waigaoqiao Shipbuilding.

The company’s ships earned an average gross Time Charter Equivalent rate (TCE) of USD 14,672 per day in Capesize segment, USD 13,679 per day in Panamax market, while its Supramaxes earned USD 11,256 per day.

Commenting on the market developments GoodBulk said that the Capesize market began 2018 with significant volatility before daily spot rates declined from USD 20,890 in January to USD 7,051 in April 2018 amid restricted cargoes and seasonal decline in spot rates due to the Chinese New Year. As cargo volumes normalized, spot rates rebounded sharply to end April at USD 17,176 per day.

“Management remains optimistic that the Capesize market is in the beginning stages of a cyclical recovery supported by stronger fundamentals on both the demand and supply sides of the market as evidenced by the stronger spot rates for Capesize vessels in 2018 versus 2017 during the seasonally weak first quarter,” the company explained.

Demand, boosted by the new trade of seaborne coal from the United States to India, is expected to benefit especially the larger vessels. In addition, availability of iron ore cargoes is set to be increased in the second half of the year as iron ore producers reaffirm their 2018 production targets.

On the supply side, the Capesize fleet should see limited growth until 2020 following two years of minimal new ordering and the scrapping wave of 2015 and 2016. According to GoodBulk, this fundamental position of demand and supply could result in a tight market in the second half of 2018 with a corresponding response in Capesize spot rates.

Speaking on future investments, GoodBulk explained that it is able to invest in drybulk vessels ranging in size from 50,000 to 210,000 DWT.

However, the company’s management believes that Capesize vessels represent the most attractive risk-adjusted return of all dry bulk vessel sizes.

Upon completion of the acquisition of the Aquakatie, GoodBulk will control a fleet of 25 dry bulk vessels, including 22 Capesize vessels, one Panamax, and two Supramaxes.